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A Survey of National Efforts to Promote andAchieve Convergence with International
Financial Reporting Standards
G A A P C O N V E R G E N C E 2 0 0 2
BDODeloi tte Touche Tohmatsu
Ernst & YoungGrant ThorntonKPMGPricewaterhouseCoopers
Research by
Donna L. Street
University of Dayton
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[] by drawing on the best of
US GAAP, IFRSs and other
national standards, the worlds
capital markets will have a set
of global accounting standards
that investors can trust.
Sir David Tweedie
Chai rman of the IASB
[Adoption of IFRS will mean
that] investors and other stake-
holders will be able to compare
like with like. It will help
European firms to compete on
equal terms when raising capital
on world markets.
Fri ts Bolkestein,
European Commissioner for
the Internal Market
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Ta b l e o f C o n t e n t s
2 Highlights
4 Background
6 T hi s Ye ar s R ep or t
7 Fi nd in gs , O bs er va ti on s, a nd
Recommendat ions
14 The Way Forward
15 Survey Met hodo logy and
Limitat ions
1 6 Ap pe ndix
24 Endnotes
1 A SURVEY OF NATIONAL EFFORTS TO PROMOTE AND ACHIEVE CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
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H i g h l i g h t s
GAAP CONVERGENCE 2002 2
Investors are increasingly making capital allocation deci-
sions based on global opportunities. Globalisation of capi-
tal markets has helped fuel demand for a common
worldwide accounting framework. Use of different national
accounting standards makes it more difficult and costly for
an investor to compare opportunities and make informedfinancial decisions.
Differences in accounting standards also impose additional
costs on companies that must prepare financial information
based on multiple reporting models in order to raise capital
in different markets, as well as creating potential confusion
as to which are the real numbers.
In April 2001 the restructured International Accounting
Standards Board (IASB) was given a strong mandate by
the major constituents of the worlds capital markets to
realise the goal of developing a single set of high-quality
accounting standards.
The major accounting firms support the IASBs efforts and
have conducted three annual surveys of reporting practices
worldwide to measure progress towards convergence. This
document summarises the findings of our most recent survey.
GAAP Convergence 2002provides an overview of country
plans, as of December 2002, to promote and achieve con-
vergence with International Financial Reporting Standards
(IFRS). Highlights of our findings from surveys in 59
countries include:
CONVERGENCE IS COMING
Over 90 percent of the surveyed countries intend to
converge with IFRS, indicating that the IASB is
viewed as the appropriate body to develop a global
accounting language.
The majority of the surveyed countries currently have for-
mally stated their intention to converge. Typically, this
intention takes the form of a governmental or other regu-
latory requirement, or a policy announced by the national
accounting standard setting body. In many instances, the
country initially will require only listed companies to
adopt IFRS. In other countries, national standard setters
have an agenda designed to remove existing differences
between IFRS and their national GAAP, covering listedand unlisted companies. Some countries are pursuing a
combination of these two strategies.
BUT OBSTACLES STILL EXIST:
There are disagreements in some countries with the
requirements of certain significant IFRS (such as finan-
cial instruments and other standards based on fair value
accounting). In addition, there is tension between the
capital markets orientation of IFRS and the tax-driven
nature of some national accounting regimes.
The complicated nature of some IFRS is perceived as abarrier to convergence in about half of the surveyed
countries. Consequently, countries may be limiting
implementation of IFRS to listed companies. The result
of this approach will be a widening of the gap between
IFRS and the national accounting standards utilised by
small and medium-sized entities (SMEs).
AND S IGNIF ICANT CHANGE M ANAGEM ENTCHALLENGES L IE AHEAD:
The coverage of IFRS in the education and training of
professional accountants needs to be increased.
Timely national language translations of IFRS, including
interpretations, need to be made available.
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GAAP CONVERGENCE 2002 4
B a c k g r o u n d
In GAAP 2001, we discussed the urgency for a global
accounting and financial reporting framework and noted
that the IASB is best positioned to lead these efforts.
Several significant events have occurred since that support
this view. In 2002, the European Parliament and the
European Council of Ministers passed a Regulation thatrequires the adoption of IASB standards. From 2005, all EU
listed companies are required to prepare their consolidated
financial statements in accordance with IFRS.1, 2 This
Regulation also will require listed companies based in the
central and eastern European countries that plan to join the
EU to prepare for adoption of IFRS.
During the last quarter of 2002, several events also tran-
spired in the United States that ultimately resulted in the
national accounting standard setter, the Financial
Accounting Standards Board (FASB), linking its agenda
and priorities much more closely with those of the IASB.
Following the appointment of former IASB board member
Robert Herz as chairman of the FASB, the IASB and FASB
have agreed that convergence of IFRS and U.S. GAAP is a
primary objective of both Boards. In recent years, the
existence of a formal liaison relationship between the two
Boards, their monitoring each others major projects, and
their working on joint projects have contributed to the
reduction of differences between these two sets of interna-
tionally recognised standards. Yet, the Boards recognise
that many differences remain, which are collectively
major irritants to those using, preparing, auditing, or regu-
lating cross-border financial reporting.
In addition, the IASB and FASB recently added a short-
term convergence project to their agendas. The scope of
this project is limited to resolving those differences in
which convergence around a high-quality solution appears
to be achievable in the short term, usually by selecting cur-
rent practice under either existing IFRS or U.S. GAAP. The
two standard setters agreed to use their best efforts to issue
Exposure Drafts(ED) during 2003
that will reflect
common solu-
tions to at least
some of the iden-
tified differences.
Subsequently, the
IASB and FASB
issued a memo-randum of under-
standing that for-
malises the com-
mitment of both Boards to converge their standards based
on high-quality solutions. The Boards also committed to
then maintain convergence through continued progress on
joint projects and coordination of future work programmes.
The U.S. Securities Exchange Commission (SEC) and the
European Commission welcomed this formal agreement
between the IASB and FASB.
[The IASB FASB] announcement
is a very positive move towards a single
worldwide set of high-quality, best of
breed, principles-based financial
reporting standards, which would dra-
matically improve the efficiency of
global capital markets.
Frits Bolkestein,European Commissioner for
the Internal Market
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T h i s Ye a r s R e p o r t
GAAP CONVERGENCE 2002 6
GAAP Convergence 2002 represents the third in a series of
surveys conducted by the large accounting firms to encour-
age convergence of national accounting standards with
IFRS. In the past two years, we provided a status reportof
the extent to which national accounting standards in various
countries differed from international standards.
Last years survey revealed that many national standards
continue to have numerous and major differences from
IFRS, and that more effort should be made in these countries
to identify differences from international standards and to
work to remove them over time. Hence, this years survey
has been designed to learn more about each countrys
plansor lack thereofto promote and achieve conver-
gence with IFRS.
Focusing on listed companies, GAAP Convergence 2002
provides an indication of the convergence plans of 59 coun-
tries and seeks to answer the following key questions:
Is there a plan to adopt IFRS or converge national
accounting standards with IFRS?
What is the nature of the convergence plan?
What difficulties have been faced to date and what are
the obstacles to further convergence?
We conducted the survey by asking accounting professionals
in each of the countries to complete a questionnaire about
their countries convergence plans. The responses represent
the views of the accounting professionals in each country
and not necessarily those of the national governments or
standard setters.
Our report concludes with observations and recommenda-tions to encourage national standard setters and other relevant
parties, including the accounting profession, governments,
and regulators, to move forward to achieve a single set of
global accounting standards.
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7 A SURVEY OF NATIONAL EFFORTS TO PROMOTE AND ACHIEVE CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
F i nd i ng s , O b se r va t io n s ,a n d R e c o m m e n d a t i o n s
The discussion and recommendations below are based on
survey results that are summarised in the Appendix. We
encourage you to review our findings and observations in
the context of our survey methodology and limitations as set
out on page 15.
PLANS TO ADOPT IFRS OR ENSURE CONVERGENCEWITH IFRS
Findings
Our survey reveals that the IASB is viewed as the appropri-
ate organisation to develop a global accounting language
that provides high-quality financial information and
enhances transparency. As illustrated inFigure 1,3 95 percent
of the 59 countries surveyed in GAAP Convergence 2002
either have adopted, intend to adopt, or intend to converge
with, IFRS. Iceland, Japan, and Saudi Arabia have not yet
expressed an intention to converge with IFRS.
Figure 1: Intentions Regarding Accepting IFRS or ConvergingWith IFRS
Observation
The adoption of IFRS by most major countries around the
world, as well as general trends toward globalisation, should
encourage these remaining countries to look to IFRS for
guidance in the future.
CONVERGENCE STRATEGIES
FindingsTwo countries in our survey, Kenya and Cyprus, already
have adopted IFRS as their mandatory standard. For the 54
survey countries that intend to converge with IFRS in full or
in part,Figure 2 indicates the basis that supports the coun-
tries intentions to converge.4
Thirty-nine of these countries have a formal plan for the
adoption of, or convergence with, IFRS. This is evidenced
by either a governmental or other regulatory requirement, or
a formal plan announced by the national standard setting
body. Of the countries with a formal plan, 25 are EU mem-
ber states or countries that plan to join the European Union.
For many countries, the plan primarily consists of requiring
5%3%
92%
Have already adopted IFRS
Plan to adopt or converge with IFRS
No current intention to converge with IFRS
Source: GAAP Convergence 2002
57%
15%
28%
Governmental or other regulatory requirement
Formal plan by the accounting standard setting body
Other
Source: GAAP Convergence 2002
Figure 2: Basis For Convergence Plan
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GAAP CONVERGENCE 2002 8
We recommend that all countries begin to eliminate impor-
tant differences with IFRS if they have not done so, and pre-
pare to eventually replace national GAAP with IFRS. As we
explained in GAAP 2001, the adoption of IFRS in a country
where numerous differences exist between national and inter-
national standards might be effective if initially applied to a
limited number of companies (for example, only to listed
companies in a country with a manageable level of suchcompanies) and in the context of a highly trained accounting
profession. However, without sufficient lead time, a big
bangapproach to convergence poses a greater threat to the
short-term quality of the application of new standards when
compared with a phased approach, in which change occurs
over time.
We encourage the government and/or the national standard
setter in each country to develop a formal convergence strat-
egy that includes target dates for achieving various stages of
the plan. Considering the process followed by countries such
as Australia, Denmark, Singapore, and South Africa, as out-
lined in Figure 4 on page 9, may assist other countries in
developing such a plan. These examples suggest that most
countries need a transition period to remove existing differ-
ences with IFRS gradually, or to give companies sufficient
lead-time to prepare for the full adoption of IFRS. However,
given the interrelationships among accounting standards,
basic conceptual differences between IFRS and national stan-
dards should be removed as rapidly as possible to pave the
way for convergence. Otherwise, the gap between national
requirements and IFRS will increase significantly as new
IFRS are issued.
The ultimate goal of each countrys convergence plan
should be to adopt IFRS, supplemented only in rare
instances for national issues. If a country elects a conver-
gence strategy other than eventually replacing their national
GAAP with IFRS, companies domiciled within its borders
are unlikely to be able to comply with international stan-
dards without exception.
listed companies to prepare consolidated financial state-
ments in accordance with IFRS from 2005 in line with EU
legislation. While a few EU member states and potential
EU accession countries either plan to require all companies
to adopt IFRS (for example, Bulgaria) or are working to
converge their national GAAP with IFRS (for example,
Denmark and Estonia), most have not yet formalised a plan
for non-listed companies.
As reflected inFigure 3, almost 60 percent of the 54 coun-
tries surveyed that intend to converge plan to replace their
national GAAP with IFRS for listed companies, supple-
mented only for national issues not addressed in IFRS.
Observations and Recommendations
The intention to adopt IFRS or converge with IFRS, as noted
by most of the survey respondents, is highly admirable and to
be applauded. However, all participants in the convergence
process must appreciate the challenges that lie ahead.
20%
22%
58%
Replacing national GAAP with IFRS supplementedonly for issues not addressed in IFRS
Adopting IFRS into national GAAP on astandard-by-standard basis
Eliminating differences between IFRS andnational GAAP when possible and practical
Source: GAAP Convergence 2002
Figure 3: Approach to Convergence
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GAAP CONVERGENCE 2002 1 0
The tax-driven nature of the national accounting regime
was identified as an obstacle to convergence in almost half
of the countries surveyed. In countries where one of the pri-
mary objectives of the accounting standards traditionally
has been to determine taxable income, the existing link
between accounting and tax is seen as a potential barrier to
convergence. Financial statements prepared in accordance
with IFRS are intended primarily to serve the needs of the
capital markets, which may differ significantly from the
needs of the tax authorities.
Respondents in over one third of the countries surveyed
indicated that difficulties in achieving convergence have
been experienced or are expected to be experienced as a
result of disagreements with the approach taken in certain
IFRS. Again, the most frequently cited points of contention
are financial instruments and other standards incorporating
fair value accounting.
Several respondents also commented on difficulties associ-
ated with insufficient guidance on first-time application of
IFRS. The IASB issued the Boards first ED, First-time
Additionally, if countries do not formalise plans for non-
listed companies, the potential exists for a two-standard
system, whereby listed companies will adopt IFRS and other
companies will prepare financial statements based on
national accounting standards. While the adoption of IFRS
for listed companies is a logical transition towards conver-
gence, a two-standard system may be difficult to maintain in
the long run.
OBSTACLES TO CONV ERGENCE
Findings
Figure 5 highlights concerns expressed by the respondents
about impediments to achieving IFRS convergence.
More than half of the survey respondents indicated that the
complicated nature of particular standards has served as an
impediment to achieving convergence in their country.
Specifically, these respondents most frequently cited the
financial instruments standards and other standards that
incorporate fair value accounting as the most complicated
and therefore the ones that are impediments to convergence.
Complicated nature of particular standards
Tax-driven nature of the nationalaccounting regime
Disagreement with certain significant IFRS
Insufficient guidance on first-timeapplication of IFRS
Limited capital markets
Satisfaction with national accountingstandards among investors/users
Translation difficulties
Source: GAAP Convergence 2002
0% 10% 20% 30% 40% 50% 60%
51%
47%
39%
35%
30%
21%
18%
Figure 5: Concerns Expressed About Impediments to Achieving IFRS Convergence
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1 1 A SURVEY OF NATIONAL EFFORTS TO PROMOTE AND ACHIEVE CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
On a promising note, in several countries a national language
translation is in process, and the respondents from certain
other countries expect the next version of the existing trans-
lation to be sanctioned by the IASB. Additionally, some
respondents explained that, because English is the language
of business in their country, a national language translation
may not be necessary. Still others commented that IFRS are
available in one, but not all, of the official national lan-
guages within the country.
However, ensuring that translated IFRS are available in a
timely manner is an area that still requires much work. In
nearly one third of the countries where IFRS are available in
the national language, the translations are not available in a
timely manner. In some countries, IFRS are translated only
on an annual basis and in others the delay is even longer.
Our findings in respect of IFRS training reveal that IFRS
is part of the university curriculum in 80 percent of the
countries covered, as shown inFigure 7. However, over one
third of the respondents who indicated that IFRS is included
in the curriculum qualified their response by stating the
coverage is limited or offered by only a few universities
within the country.
Application of International Financial Reporting Standards,
in July 2002, with the expectation of issuing a final standard
in 2003. The proposals set forth in ED 1 are designed to ease
the transition to IFRS while retaining the highest quality
information practicable. We applaud the IASB for working to
address this obstacle to convergence in a timely manner.
Also reflected inFigure 5, limited capital markets and satis-
faction with current national standards were identified as
obstacles to convergence in 30 and 21 percent of the coun-
tries surveyed, respectively.
Translation difficulties were identified by some respondents
as an additional concern. The availability of IFRS in the
national languages of the countries surveyed is summarised
inFigure 6. At the time of our survey, international standards
were published in the national language(s) of 70 percent of
the countries covered. However, responses from several
countries indicated that while international standards are
available in the national language, the translation is not sanc-
tioned by the IASB.
Source: GAAP Convergence 2002
0%
20%
40%
60%
80%
100%
53% Included
20% Not Included
27% Limited Coverage
U
niversities
Surveyed
Source: GAAP Convergence 2002
0%
20%
40%
60%
80%
100%
50% Available
30% Not Available
20% Not Availableon a Timely Basis
Countries
Surveyed
Figure 6: Availability of IFRS Translation
Figure 7: IFRS Inclusion in University Curriculum
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GAAP CONVERGENCE 2002 1 2
Our findings regarding the complexity of standards also
highlight the significance of the IASBs active research
project aimed at resolving accounting issues faced by
SMEs and by companies in emerging economies. We rec-
ommend that the IASB move forward with its SME proj-
ect as a matter of priority. Otherwise, the gap between
increasingly complex IFRS and the standards used else-
where will become difficult to bridge.
Tax-Driven Nature of Accounting Regimes
We encourage governments to acknowledge the differing
roles of tax accounting and financial reporting. In jurisdic-
tions where the two are linked, we encourage governments to
consider approaches that will accommodate their different
objectives. Otherwise, convergence with IFRS may not be
feasible, particularly for SMEs.
Translations
The IASB, in conjunction with the accounting profession,
should take the lead in addressing the difficulties associated
with timely translation of IFRS into national languages.
Because of the urgent need for translations in EU member
states and those countries that are candidates for EU mem-
bership, we suggest that the European Commission work
expeditiously with the IASB and the accounting profession
to develop sanctioned translations for all of these countries.
After this work is completed, there will be a relatively
small number of countries where the government, the pro-fession, and the IASB must concentrate their efforts to
make IFRS available in the national language. However,
ongoing responsibility for maintaining timely translations
(which include all amendments to Standards as well as
Interpretations) must be assigned, and there must also be a
process for timely sanctioning of the translations.
In nearly 30 percent of the countries, IFRS training in the
national language is not provided by professional organisa-
tions, and therefore is not readily available to either prepar-
ers or auditors of financial statements.
Observations and Recommendations
Complexity of Standards
We encourage the IASB to consider the significance of ourfindings and to keep in mind the goal of making IFRS both
functional and operational. We recommend that the IASB
continue with its strategy of developing standards based on
sound principles, and continue to clearly set out the rationale
for each new IFRS in a Basis for Conclusions. The IASB
should also maintain awareness of the obstacles faced by var-
ious countries and continue to work with national standard
setters in this regard.
For their part, the countries should realise that global stan-
dards will not be achieved if they selectively adopt only
those international standards that suit their national inter-
ests or reflect their current practice.
The difficulty experienced by countries in coping with
complex and significant changes is compounded by the
pace and degree of change. We appreciate that the IASB is
working diligently to improve IFRS as soon as possible,
with 2005 as an important target date. As a result, many
standards are currently under review and new proposals are
being issued. However, it is equally important for the IASBto strike a balance between the need to improve IFRS on a
priority basis and the practical difficulties that countries
and companies face in implementing its Standards.
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1 3 A SURVEY OF NATIONAL EFFORTS TO PROMOTE AND ACHIEVE CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
tional Education Standards. This model will provide the
outline of an IFRS-focused curriculum that also incorpo-
rates issues related to practical application of international
standards. In addition, we observe that IFRS should be a
significant part of the accounting curriculum at all, as
opposed to some, universities. In those countries that plan to
converge their national standards with IFRS, existing differ-
ences between IFRS andnational GAAP should
be highlighted and the
importance of global
convergence should be
clearly communicated.
We encourage the IASB to take on full responsibility for
these translation efforts. Timely translation is even more
essential in light of the IASBs proposed requirement for
companies reporting in accordance with IFRS to disclose the
effect of newly issued standards.
Education and Training
A high priority should be assigned to accelerating efforts toaddress both the education of practicing accounting profes-
sionals and the university education of those individuals
entering the accounting profession.
Successfully addressing education and training deficiencies
for practicing accounting professionals is dependent on the
profession obtaining the support of international organisa-
tions such as the World Bank, as well as governments and
educators. We recommend that international organisations
join with the International Federation of Accountants
(IFAC) and the profession to focus on the development of
high-quality IFRS training programmes and to assist in
translating and modifying these training programmes as
needed for specific countries. Upon achieving sufficient
regional/national support, the profession and international
organisations should participate in delivering these training
programmes to preparers and auditors in those countries that
are converging with or adopting IFRS.
We also recommend that the profession and international
organisations commit to working with IFACs EducationCommittee to develop a model university curriculum based
on the IFAC Education Committees forthcoming Interna-
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The questionnaire also did not seek to address any different
or additional requirements that may apply to financial ser-
vices or other specialised industries.
The respondents were encouraged to provide explanatory
comments throughout the survey, which were used in the
preparation of this report.
S u r v e y M e t h o d o l o g ya n d L i m i t a t i o n s
To obtain the data to compile GAAP Convergence 2002, we
asked professionals in the six largest accountancy firms in
59 countries to complete a questionnaire that addressed
country plans for convergence of national accounting stan-
dards with IFRS. Partners from the large accountancy firms
collectively completed the 2002 questionnaire and then
reviewed the resulting report presented here. A copy of the
survey questionnaire is included in theAppendix.
In completing the questionnaire, the respondents were asked
to focus on listed companies and to provide appropriate
additional information for non-
listed companies. Thus, the fig-
ures included in the report
categorise countries based on
the scenario for listed compa-
nies. The comments given inrespect of non-listed companies
enabled us to include some
statements regarding countries
with differential requirements which may lead to a two-
standardscenario.
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A p p e n d i x
GAAP CONVERGENCE 2002 1 6
Table 1
COUNTRIES SURVEYED IN GAAP CONVERGENCE 2002
ArgentinaAustraliaAustriaBelgiumBrazilBulgariaCanadaChileChinaCyprusCzech RepublicDenmark
EgyptEstoniaFinlandFranceGermanyGreeceHong KongHungaryIcelandIndiaIndonesiaIran
IrelandIsraelItalyJapanKenyaLatviaLithuaniaLuxembourgMalaysiaMexicoNetherlandsNew Zealand
NorwayPakistanPeruPhilippinesPolandPortugalRomaniaRussiaSaudi ArabiaSingaporeSlovakiaSlovenia
South AfricaSouth KoreaSpainSwedenSwitzerlandTaiwanThailandTunisiaUnited KingdomUnited StatesVenezuela
Source: GAAP Convergence 2002
Table 2
COUNTRIES THAT DO NOT CURRENTLY INTEND TO CONVERGE WITH IFRS
Iceland Japan Saudi Arabia
Source: GAAP Convergence 2002
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GAAP CONVERGENCE 2002 1 8
Table 4
CONCERNS EXPRESSED ABOUT IMPEDIMENTS TO ACHIEVING IFRS CONVERGENCE
AustraliaBulgariaChileChinaEstoniaFinland
FranceGermanyIndiaIndonesiaIranIreland
LatviaLithuaniaLuxembourgMalaysiaNorwayPhilippines
PolandPortugalRomaniaRussiaSlovakiaSouth Korea
SpainThailandTunisiaUnited KingdomVenezuela
AustriaBelgiumBrazilBulgariaCzech RepublicFinland
FranceGermanyGreeceHungaryIndiaIran
ItalyLithuaniaLuxembourgPakistanPortugalRomania
Saudi ArabiaSlovakiaSouth KoreaSpainSwedenSwitzerland
ThailandTunisiaVenezuela
COMPLICATED NATURE OF PARTICULAR STANDARDS (51%)
Percentages are based on 57 countries that have not yet converged with or adopted IFRS.
TAX-DRIVEN NATURE OF THE NATIONAL ACCOUNTING REGIME (47%)
ArgentinaAustriaDenmarkFinlandFrance
GermanyHong KongIranIrelandItaly
JapanMalaysiaNetherlandsNew ZealandPeru
RomaniaRussiaSingaporeSpainThailand
United KingdomVenezuela
DISAGREEMENT WITH CERTAIN SIGNIFICANT IFRS (39%)
BulgariaCzech RepublicDenmarkIndia
ItalyJapanLatviaLithuania
NorwayPeruPhilippinesPoland
PortugalRomaniaSouth AfricaSouth Korea
TaiwanThailandTunisiaVenezuela
INSUFFICIENT GUIDANCE ON FIRST-TIME APPLICATION OF IFRS (35%)
BelgiumBulgaria
EstoniaFinland
LatviaPeru
RussiaSpain
SwedenThailand
TRANSLATION DIFFICULTIES (18%)
AustriaBulgariaCzech RepublicEstonia
FinlandIcelandIranLatvia
LithuaniaPakistanPhilippinesPoland
RomaniaRussiaSlovakiaThailand
Tunisia
LIMITED CAPITAL MARKETS (30%)
ChileCzech RepublicFinland
JapanLuxembourgMexico
NetherlandsNorwayPoland
Saudi ArabiaThailandUnited States
SATISFACTION WITH NATIONAL ACCOUNTING STANDARDSAMONG INVESTORS/USERS (21%)
Source: GAAP Convergence 2002
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1 9 A SURVEY OF NATIONAL EFFORTS TO PROMOTE AND ACHIEVE CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
IFRS/IAS Convergence Questionnaire
IFRS/IAS CONVERGENCE QUESTIONNAIRE
1.
2.
3.
4.
QUESTION
Source: GAAP Convergence 2002
YES/NO EXPLANATION(Attach additional pages if necessary)
PART A: Plans*
Is it intended that there will be convergence ofyour countrys national accounting standardswith IFRS/IAS either in full or in part?
If the answer to Question 1 is no, are there plans toconverge with another widely recognised bodyof GAAP? If so, which one?
If the answers to Questions 1 and 2 are NO go toQuestion 5.
If the answer to Question 1 or 2 is yes, is thatintention evidenced by:
Governmental or other regulatorymandate or decree (including regional
regulatory bodies such as theEuropean Commission and stockexchange listing requirements)?Please describe, including to whichcompanies/entities the governmentalor regulatory decree applies.
A formal plan for convergence by theaccounting standard-setting body withspecific implementation steps? Pleasedescribe.
A policy announced by the accountingstandard-setting body? Please describe.
A policy announced by government orother regulatory body? Please describe.
Other? Please describe.
If the answer to Question 3a or 3b is yes, is amandatory convergence or adoption date specifiedby the legislation (or equivalent) or by the standard-setting body? Please describe the date(s) andspecifically to which companies/entities thelegislation or standards will apply.
3a.
3b.
3c.
3d.
3e.
* In completing the questionnaire, if the national requirements and conversion plans vary depending onthe nature of the company, please respond to the questions for listed companies, with additional com-ment for those entities without publicly traded securities. As with GAAP 2000andGAAP 2001, you neednot address the details of specialised industry GAAP (for example, banking or insurance) used forreporting to regulatory authorities.
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GAAP CONVERGENCE 2002 2 0
IFRS/IAS CONVERGENCE QUESTIONNAIRE (continued)
5.
6.
7.
8.
QUESTION
Source: GAAP Convergence 2002
YES/NO EXPLANATION(Attach additional pages if necessary)
PART A: Plans*
If there are no plans for convergence with or adop-tion of IFRS/IAS, may companies voluntarily adoptIFRS/IAS for national reporting purposes?
If the answer to Question 5 is no, is convergencecurrently being discussed and/or considered by thenational regulatory or standard-setting authorities?
What factors are expected to influence theconvergence decision?
What, if anything, would be needed to causethe national regulatory or standard-settingauthorities to address convergence ofnational standards?
In any case, what difficulties have been experiencedor are anticipated in working toward convergence,for example:
Insufficient guidance on first-time applica-tion of IFRS?
The tax-driven nature of the nationalaccounting requirements?
The reluctance of national authorities toaccept standards based on rules that areprepared by an international organisation?
The desire to wait until the IASB has beenoperating for a longer period beforeevaluating the merits of IFRS?
A disagreement with certain significantIFRS? Please identify.
General satisfaction with national account-ing standards and a lack of interest frominvestors and other users to changenational standards.
Other? Please describe.
If plans for convergence involve specific milestones(see Question 3b), have those milestones generallybeen met to date?
6a.
6b.
7a.
7b.
7c.
7d.
7e.
7f.
7g.
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2 1 A SURVEY OF NATIONAL EFFORTS TO PROMOTE AND ACHIEVE CONVERGENCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
IFRS/IAS CONVERGENCE QUESTIONNAIRE (continued)
9.
10.
11.
12.
QUESTION
Source: GAAP Convergence 2002
YES/NO EXPLANATION(Attach additional pages if necessary)
PART B: Accounting Standards
Does convergence with IAS take the form of:
Replacing your countrys national GAAPwith IFRS/IAS, supplemented only fornational issues not addressed in IFRS/IAS?
Adopting IFRS/IAS into national GAAP ona standard-by-standard basis?
Eliminating differences between IFRS/IASand your countrys national GAAP by con-verging with IFRS/IAS standards whenpossible and practical?
Other? Please describe.
If convergence will involve replacing your countrysnational GAAP with IFRS/IAS or adopting into nat-ional GAAP on a standard-by-standard basis, willthe IFRS/IAS be incorporated into national GAAP
with no changes (that is, word for word)?
In any case, what are the national impediments toachieving convergence, for example:
The complicated nature of a particularstandard? Please identify the standards.
A lack of capital markets in the country orunderdeveloped capital markets?
Translation difficulties of IFRS into thenational language?
The lack of existence of transactions ofa specific nature (for example, pensionsand other post-retirement benefits)?Please describe.
Other? Please describe.
If convergence will involve replacing nationalGAAP with IFRS/IAS, which standards issued bythe IASB/IASC are yet to be adopted with anidentical text?
9a.
9b.
9c.
9d.
11a.
11b.
11c.
11d.
11e.
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GAAP CONVERGENCE 2002 2 2
IFRS/IAS CONVERGENCE QUESTIONNAIRE (continued)
13.
14.
15.
16.
QUESTION
Source: GAAP Convergence 2002
YES/NO EXPLANATION(Attach additional pages if necessary)
PART B: Accounting Standards
PART C: Training
If convergence will involve replacing national GAAPwith IFRS/IAS, what will be the timing of issuanceof the national standard?
Immediately upon issuance of the IFRS?
Within 6 months of issuance of the IFRS?
Within 12 months of issuance of the IFRS?
Other? Please describe.
If plans call for convergence with IAS by beingadopted into national GAAP on a standard-by-standard basis (see question 9b) or beingadopted into national GAAP by eliminatingdifferences when possible and practical (seequestion 9c):
Which standards issued by the IASB/IASC
are yet to be adopted into national GAAP?
What issues are viewed as priority in thepath to convergence?
Are IAS/IFRS published in the national language?
If the answer to 15 is yes, it it an officialtranslation sanctioned by the IASB?
Are IFRS/IAS and IFRIC/SIC Interpretationstranslated as they are issued? What is thetime lag between issuance and the availa-bility of the Standard/Interpretation?
Is the translated version of Standards/Interpretations widely available?
Is IFRS/IAS included in the curriculum for trainingaccountants?
Is IFRS/IAS included in university curriculum?
Do professional organisations provideIFRS/IAS training in the national language?
Are IFRS/IAS training programmes availableto preparers of financial statements?
Are IFRS/IAS training programmes available
from other sources? Please describe.
13a.
13b.
13c.
13d.
14a.
14b.
15a.
15b.
15c.
16a.
16b.
16c.
16d.
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GAAP CONVERGENCE 2002 2 4
E n d n o t e s
1 The Regulation is effective for accounting periods begin-
ning on or after 1 January 2005. A limited deferral is pro-
vided until 2007 for companies publicly traded both in the
European Union and on a regulated third-country market
that are already applying another set of internationally
accepted standards and companies which only have pub-licly traded debt securities. This deferral requires national
legislation being enacted to implement it.
2 IFRS include future standards to be issued by the IASB
as well as International Accounting Standards (IAS)
issued by the former International Accounting Standards
Committee.
3 In completing the questionnaire, if the national require-
ments and convergence plans vary depending on the nature
of the company (e.g., listed or privately owned), the
responses represent those applicable for listed companies.
Thus, the figures categorise countries based on the scenario
for listed companies.
4 Our findings provide a snapshot of country intentions at the
time of the survey. As several countries are in the process
of developing or modifying IFRS convergence plans, the
situation is changing continuously.
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In completing this survey,
we gratefully acknowledge
the contribution of many
hundreds of large-firm part-
ners and managers across
the world. Special thanks
also goes to Stacy Brown
and Andrea Freeborough
for their significant contri-
bution and enthusiasm in
coordinating the GAAP
Convergence 2002project.
This report is also available
on www.ifad.net
Copyright jointly by:
BDODeloitte Touche Tohmatsu
Ernst & YoungGrant Thornton
KPMG
PricewaterhouseCoopers
All rights reserved.
The information provided in GAAP Convergence 2002
should not be seen as the final word on convergence since
it is a survey based on information at a point in time and
in many cases represents the views of the preparers of thepublication. No responsibility for loss to any person or
organisation acting or refraining from acting as a result of
any material in the publication can be accepted by the pre-
parers of the publication or the accountancy firms that
assisted in the underlying survey.
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